Ottawa’s housing market is looking up, and if you’re planning on buying a house, you should be saving money for your down payment.
Interest rates on homes in Ottawa are still fairly low, and the job market appears to be improving. Those factors mean it’s a perfect time to shop for a home. Here are some tips for creating the nest egg you’ll need for your down payment.
Saving money starts with spending less than you bring home. By creating a budget, and sticking to it, you can effectively see where your money goes, and figure out where you can make cuts to start saving for one of the many new homes in Ottawa. A budget requires honesty, though. There’s no “cheating” to make things work. It has to be an honest accounting of where you’re spending your money if it’s to be helpful.
Don’t Splurge with Extra Money
Should you be fortunate enough to receive extra money, whether a great tax refund, an inheritance, or any other kind of financial payout, resist the urge to treat yourself to a new wardrobe or a dream vacation. Save that money! It puts you that much closer to your goal of buying one of the beautiful homes in Ottawa. Once you have your down payment saved and your home in your sights, you’ll be glad you showed restraint.
Treat Your Savings as Inviolable
Looking at your bank account can be misleading. As you save money, you’ll see your balance grow and fall into the trap of thinking you have a bit of “wiggle room” in your budget. Don’t fall for it! Instead, set up a dedicated account for the down payment on your new home in Ottawa. The money in that account should be viewed as sacrosanct: never touch it unless absolutely necessary. Even if you find yourself in dire financial straits for a few weeks, don’t take money out of your down payment account.
Save Big for Your Down Payment
Instead of making small sacrifices, look for areas where you can cut large expenses and save that money for your down payment. Yes, it’s important to cut expenses overall, like buying store-brands to make more room in your food budget, but you probably won’t put the extra grocery money in savings, even if you intend to do so. It’s more likely that you’ll splurge on a better cut of meat or ingredients for a special meal. Cutting big expenses like car payments and vacations can allow you to put much larger chunks of money in your down payment account, allowing you to reach your goal sooner.
Put Saving on Autopilot
As soon as you have your dedicated savings account for your down payment, notify your payroll department that you’d like part of your pay to be deposited into it, with the remainder being sent to your main account. The idea is to make your saving automatic. Your monthly budget amount will give you a good idea of how much you can contribute to your down payment account. You probably won’t even miss that money after a while, as long as you’ve made a proper budget.
Finding the Perfect Home
Saving for a down payment may be a little painful at first. It can be tough to live without the little extras, until you get used to being without them. Just remember, driving that old car may be a little irritating (and possibly, a little embarrassing), but keeping it, and cutting other nonessential expenses, will allow you to have your own home sooner. That’s a trade-off worth making.